Have you heard the one about the real estate developer? He never met a proforma he didn’t like.

On the other hand, as an operator, I want to know, first and foremost, what something is going to cost me to operate. During my many years of developing and managing multi-family properties across the Midwest with Village Green Companies, I was known (affectionately?) as the “Budget Monster.” It was a title I relished borne of an approach that has served me (and my clients) well.

Every budget or proforma, first and foremost, has to be carefully developed and scrutinized. Dover Realty Advisors subscribes to a system of “sources and uses” which creates internal escrows; an inherent discipline for properly handling hard and soft project expenses – everything from legal to accounting to inspection work.

It is imperative that there is absolutely no guesswork where cash flow projections are concerned. If rents are too low and costs are off the return will not be there and what you thought would be a 10% return is suddenly 4%. You need to know where every dollar is coming from and where it is going.

Also key for analysis: What’s happening now in a particular area you are looking to develop. For example, are competing properties on the drawing board (a negative), or, are transportation/infrastructural improvements in the works (a positive). How about with regard to the demographics of your potential customers? Are factors related to age and income lining up in your favor? Are these individuals there now? Will they stay? Are more coming? If you are going to have to wait 5 years for a particular neighborhood to transition in your favor, or, if it is poised for a downturn, more than likely that area is not ideal or even viable.

The proforma, then, should be a starting point for determining a property’s viability. From there, do your homework and then some.

Every business has an unspoken set of basic rules and guidelines. We’ll call them best practices – basic fundamentals that can become pillars of success. Listen, learn and plan before taking action.

The same principals have applied for years in our multifamily business with any upgrades we perform. Customer comments and suggestions often then become trial programs; our version of R&D, to improve resident life and our communities overall.

And let’s not kid ourselves here. Our goal is to rent as many apartments at the highest possible price to net the best bottom line. The only way to do that is to listen and relate to your customers, providing them with the best resident/customer/living experience possible. Although we rent apartments, we’re still in the service industry.

So going back to R&D – at Dover Realty Advisor-managed properties, we take customer suggestions and our own thoughts, and pick specific sites to implement trial programs. This can range from anything to new technology upgrades to interior design improvements aimed at surpassing our customers’ expectations; ideally, providing them with amenities, services and conveniences they cannot find elsewhere. When we find a successful plan and work out the kinks on the micro level, we can then apply it on the macro to additional properties.

In the end, we focus on the bottom line while driving top-line revenue through a positive customer experience, mindful all the while of budgets and overall profitability.